Everyone loves the holidays, but does the economy share our holiday spirit? The holiday season is undoubtedly the peak of spending, whether you look at it statistically or just by watching yourself and friends. This year, holiday spending in the United States is projected to reach over a trillion dollars. The holidays affect the economy in different ways; sometimes, they lead to positive things such as the creation of new jobs, more profitable charities, increased tourism, and, in some cases, boosts to small businesses. However, they can also have negative effects, such as pressure on small businesses, consumer overspending, decreased spending soon after, and Christmas creep.  

The holiday season accounts for about 20–30% of total retail sales/revenue. Holiday spending has increased by an astonishing 110% since 2005, far surpassing inflation’s rise of about 66% showing just how much holidays such as Christmas, Kwanza, and Hanukkah have grown in influence and economical importance. This year it is expected that an average of $1107 per shopper, and a total of $250 billion, will be spent on gifts. This is a significant increase of nearly 20% from last year’s $925 per shopper and 201 billion total. This all ties into the idea of “Christmas creep.” This is the idea that Christmas and holiday marketing is bleeding further and further forward in our years. This goes beyond those friends you have who think that the moment Halloween is over, it’s Christmastime. Christmas creep is a marketing tactic used to further increase sales by starting buying earlier and earlier, giving you more time to buy, and more time to feel guilty for not buying more. It utilizes the idea of multiple sale periods, Black Friday, pre-Black Friday, Veterans Day sales, and more, all designed to give the consumer purchasing anxiety. They get you to constantly look at “low prices” and inevitably your mind gives in. You may be asking yourself, “Why does this matter?” This significant increase matters as it comes at a time with increasing distrust in our larger economy stemming from growing wealth inequity, inflation, job loss and more. It marks a shift in spending patterns and shows how strenuous holiday shopping can be on consumers. Studies show that 30% of consumers who bought gifts last year with credit cards still have unpaid debt from such bills. This is interesting to see as a shift from the “Financial Independence, Retire Early (FIRE)” prioritization. FIRE is an aggressive saving and investment finance approach to allow for earlier retirement. Instead, a lifestyle of prioritizing current comfort over later financial stability among Gen Z is being observed by market analysts. 

In the US, holiday profits can equal upwards of one trillion dollars, roughly three percent of the Gross Domestic Product (GDP). This year, the holiday spending is expected to amount to above $1.1 trillion in retail sales, a four percent increase from last year. Some even predict amounts of up to 1.6–1.7 trillion dollars spent. This figure would be the highest in history and could potentially bring up national GDP by a small percentage. The upward trend in annual spending, without accounting for inflation, could be the cause of some pretty substantial growth. However, this can work in both ways, with lower-than-expected spending having the potential to negatively affect GDP growth. 

Another effect of spending, beyond GDP growth, is job creation. According to Forbes, 543,100 jobs were added as a result of the holiday season in 2024. This could be great, since we are currently experiencing a time of high unemployment with multiple months of negative employment rates; yet it’s not as promising as it looks. When we dig a little deeper, we see that 543,000 is a drop of 4% from the previous year, and it doesn’t get better. This year, the number is expected to not surpass 500 thousand. If this metric turns out to be true, 2025 will have had the worst holiday job employment performance in over 16 years—keep in mind that 16 years ago was in the midst of the global financial crisis of 2008. It is possible that this drop in job openings has a correlation with online shopping. Surveys show that more than 40% of shoppers say they will be buying more than half of their gifts online. Although the predicted holiday job creation may still seem large, it actually shows both a declining job market and economy and reflects growing distrust and poor expectations in those fields.

Some other sectors which are largely impacted by the holidays are small businesses and charities. Small businesses experience a mixed experience during the holiday season; many companies make 30% of their annual revenue during this period. For small businesses, this is a great way to gain a presence in the industry. With 70% of people specifically looking for sales or deals during holiday shopping, many small businesses are able to gain customers through offering limited time deals and create lasting customers by providing a positive experience. However, this can also go the other way around. Small businesses can receive pressure during this time. Due to the dominance and size of mainstream retailers, they are easily able to bring down prices to present appealing deals to the customer. However, most small businesses thrive off of loyal customer bases, not large deals. Many are saying they won’t be able to keep prices down due to less customers, tariffs, inflation, and plenty of other factors, meaning people will simply turn to already-large retailers for their shopping, leaving small businesses to take losses they can’t afford. Overall, this means the holiday season could have an adverse affect on businesses, driving customers away due to their inability to bring about lower prices and large deals.

It’s important to know the effects of our holiday spending habits in order to better understand the state of our economy. Today, with such negative prospects, it is essential that we understand the marketing strategies such as Christmas creep and the competitiveness of the job market.